Credit Score To Qualify For Mortgage Lending Guidelines

Credit Score To Qualify For Mortgage Lending Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

This guide covers credit score to qualify for mortgage lending guidelines. It is not the end of the world for consumers with bad credit. Millions of Americans had a point in their lives where they lost their jobs, had unexpected medical emergencies. Others went through a divorce where their credit suffered.

Unfortunately, credit can suffer in a matter of a few months. Unfortunately, repairing credit and improving credit scores takes patience and time. With time, credit and credit scores will improve.

Fortunately, there are ways to improve credit. This holds true as long as consumers understand how it works. Consumers do not have to hire an expensive credit repair company to repair credit and to improve credit scores. Consumers can improve credit scores and repair credit themselves. But need to understand some credit repair basics.

Importance of Credit Tradelines

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Many people believe that closing old credit accounts will improve your credit scores. This theory of closing out older credit tradelines is not true. Having a credit history is part of the overall credit profile and affects credit scores. It is called credit seasoning. The more good credit history consumers have on the overall credit record, the better their credit scores will be. Having more credit lines open shows strength and can offset a negative credit tradeline. Closing aged open credit tradelines will hurt credit scores. In this article, we will discuss and cover the Credit Score To Qualify For Mortgage Lending Guidelines. Speak about scredit score to qualify for mortgage.

Importance of New Credit Tradelines

Credit is very important. Consumers should have the following:

  • Three to five revolving credit accounts
  • One to three installment accounts

Types of Credit Tradelines and Credit Score To Qualify For Mortgage

Having a variety of different types of credit creates a stronger credit profile. Hard credit inquiries will be hurting credit scores. These inquiries are called a hard credit pull and it stays on a credit record for two years. Applying for a bunch of credit cards all at once will definitely hurt credit profile and credit score. Multiple credit inquiries at the same time will alert potential lenders that something is wrong. However, the drop in credit scores is temporary and will go back up in a few months.

Bad Credit on Credit Report

What is the assessment of the creditworthiness to qualify for a mortgage and the types of credit lines requiredDo not worry too much about older derogatory items on credit reports. Older aged collection accounts, charge-off accounts, and other derogatory credit items do not affect credit scores. Bad credit items stay on a credit report for 7 years. Older derogatory credit tradelines have little to no impact on the credit scoring model after it has been seasoned for two or more years. Credit disputes are not allowed during the mortgage process (medical collection accounts are exempt from credit disputes). All negative items, with the exception of bankruptcy, must be deleted by law after 7 years from a credit report. Bankruptcies on the credit report for 10 years.

Importance of Re-Establishing Credit

Establishing new credit is what will really jump-start credit scores after bankruptcy or foreclosure. 3 secured credit cards with at least $500 credit limits is a great way to start re-establishing credit to qualify for a mortgage. Credit scores would probably increase close to 100 points in 3 to 6 months just from the 3 secured credit cards.

Other types of credit like a car loan, payday loan, or department store credit card will boost and strengthen consumer credit profiles.

Keep in mind that one late payment on a credit card, auto payment, or mortgage payment can drop credit scores by more than 50 points. Religiously make timely payments every month. One late payment can plummet credit scores and stay on the credit report for 7 years. Check credit reports at least once or more times a year for accuracy and make sure there are no errors.

What Is The Minimum Mortgage Credit Score To Qualify For Mortgage

There Are Minimum Requirements On Credit Score To Qualify For Mortgage: FHA requires 580 FICO to qualify for 3.5% down payment home purchase loans. Conventional Loans require 620. VA Loans does not have minimum credit score requirements. USDA Loans require 580. Traditional Jumbo Mortgages require 680. Gustan Cho Associates have Alternative Financing for Jumbo Loans where we offer Jumbo Mortgages with 500 credit scores. Investment Property Loans require 660 credit scores. Click here to qualify for a mortgage with minimum credit score.

Condotel and Non-Warrantable Condo Requirement on Credit Score To Qualify For Mortgage

Mortgage lenders will charge a higher rate if credit scores are low. Some lenders have credit score cutoff limits. For example, I specialize in Non-Warrantable Condominium and Condo Hotel mortgage loans. My portfolio investor of condotel and the non-warrantable condo has a minimum credit score requirement of 680. It does not matter whether a buyer will be putting a 50% down payment on Condotel purchase or whether they have millions of dollars in the bank.

But the credit score requirement cannot be negotiated. If the credit score falls below 680 FICO, the borrower will not qualify for a Condo Hotel Mortgage Loan.

What do I do when someone does not qualify for a Condo Hotel loan because their credit score is not 680 or higher? We help borrowers with quick fixes to raise their credit scores. That is how important the credit score is when it comes to qualifying for not just a Condotel loan but for any mortgage. Gustan Cho Associates is a mortgage company licensed in multiple states with no lender overlays on government and conventional loans. Contact us at 800-900-8569 to start the pre-approval process. Or text us for a faster response. Or email us at

Qualify for a mortgage with minimum credit score, Click here

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